Dáil Éireann díospóireacht -
Wednesday, 16 Nov 1960

Vol. 184 No. 7

Private Members' Business. - Adjournment Debate: Price of Flour.

Mr. Crotty

On September 5th an agreement was reached between the Minister for Agriculture and the Minister for Industry and Commerce that on the estimated yield of native wheat this year 300,000 tons would be available for use in the flour industry. On that basis millers were advised to increase the percentage of grist from 70 to 80 and an increased price of 5/9d. per sack for bakers' flour and 7/9d. per sack for household flour was suggested. Although people felt that this was an essential foodstuff they had no great objection to the increase because, even if the wheat used would be more expensive, it was native wheat and they would like to support native industry and production. They did not express too much opposition to the increase.

The justification for that increase was that instead of using 70 per cent. native wheat as was originally proposed, the percentage was to be increased to 80 and thus ten per cent. less imported wheat would be used. Imported wheat was, of course, much cheaper and therefore something had to be found to cover the increase in the price. The Minister agreed and increased the prices of bakers' and household flour. That was all right as far as it went, but on November 2nd as a result of a Question and Supplementary Questions, to the Minister for Industry and Commerce, it was brought out that, irrespective of the yield of millable native wheat from the harvest, that increase in the price of flour was to be maintained. That was news to me.

I felt that if we were not able to get the required amount of millable wheat in the normal way, flour prices would go back to where they had been or would go even lower if more imported wheat had to be used in the grist. I wanted to follow that up and put further questions. The Ceann Comhairle said that it was an argument, and not questions, we were raising. To some extent, I suppose, that was right but to have the matter clarified I put a direct question to the Minister asking, as far as I remember, when we might expect a reduction in the price of flour due to the reduced percentage of native wheat in the millers' grist.

The Minister said that, irrespective of the quantity of wheat available from the 1960 home crop, the price of flour would be maintained and an agreement to that effect had been made between himself and the Minister for Agriculture and that imported wheat would be taken and issued to the millers as Irish wheat. I do not think that is quite playing the game with the general public. I remember becoming a little bit heated in following up the question and the Minister said that if we wanted cheap bread or flour we could use imported wheat. I think there is nothing in that argument; it is only a catch-cry. Every man, woman and child in the country is anxious to see every possible grain of Irish wheat used in Irish flour and I do not think the Minister gained anything by that suggestion. That was a cheap way of saying it. Nobody wants to import more wheat. When we had wheat at 85/- a barrel, the price of flour was half the price it is today. It was the policy of the Government to remove the subsidy. I am not going into that debate again as it has been debated several times already in the House and there is no point in going further but the fact remains that when the farmers received 85/- a barrel for wheat the price of flour was half what it is today.

Native wheat has come to stay because it is the policy of the previous Government and of the present Government to have native wheat used. We have driers and corn stores and silos built to handle and hold it from season to season. There is no question of anybody suggesting any opposition to that policy or saying that we should not use Irish wheat as much as possible in Irish flour. I am sure that Irish wheat will be developed so as to be suitable for bakers' and household flour and we may then see 100 per cent. Irish wheat used and I think the people will agree to that. They did not object even though the price was terribly high, putting flour and bread into the class of luxury goods nowadays. There was not much outcry because the people felt that our own people were getting the benefit.

Last July, the Minister for Agriculture announced that there would be a levy of 4/6d. a barrel on wheat. That levy was imposed and we all know it was put on to cover the disposal of surplus wheat as it was expected that the full yield of wheat would not be consumed as in flour—it could, of course, be consumed in other things— and that the surplus would be covered by that levy. For the past year also there has been a tax of £2 per ton on imported wheat and that tax, I think, is still to the Government's credit because it was hardly used last year— I think all the wheat was millable and the farmers and the millers made full use of it. This year that import duty is liable to be increased to £6 or £8 per ton and, as a result, that increase in the price of foreign wheat will be put on to the price of bread and flour which will be considerably increased in price.

I have heard arguments here before that when the standard of living rises the consumption of flour and bread goes down as people use other foodstuffs. This is what I call a purchase tax, the first one we have had. Only the other day the Commission submitted its report and I feel this is the first purchase tax imposed by the present Government. Who is going to be hit by it? If we say that when the standard of living goes up the consumption of bread goes down therefore the family costs of the man with the lower standard of living will be added to in greater proportion than those of his well-off neighbour. Who is going to be hard hit but the ordinary man with the lower standard of living, the ordinary working man, the man on the dole and the old age pensioner because bread is their main staff of life?

I feel that if the Minister has any case at all, the burden should not be placed directly on those who cannot bear it. That is what the Government are at present doing. If the burden were carried by the Exchequer, it would be scaled equally well over the whole community—it would be borne by the man with £7,000 a year as well as by the man with 30/- a week. In this case, we are putting the burden where it presses hardest, on the poorest section of the community.

When this Question was being asked, we had the old slogan used against us that the Opposition were trying to depress the price of wheat. People use such slogans only when they know they have a bad case. If they have a good case, there is no necessity to use those propaganda slogans. Nobody is out to depress the price of wheat.

The barley harvest and a good share of the wheat harvest is in for the past three months. The stores are chock-full of barley and wheat and the Government have not made any attempt to handle the barley and wheat crop this year. A Question was asked in the House this evening about the imports of offals and the granting of licences for these imports and the Minister said that he had given a licence.

An Leas-Cheann Comhairle

The Deputy is getting away from the Question which has to do with the price of flour.

Mr. Crotty

If the Government made any attempt to handle the wheat crop, the price of flour would not have to carry any increase whatever. We are importing offals while our unmillable wheat could have been used for the past two months for the production of white pollard. It could also have been used in a mixture with maize. Bulk maize and ground maize are being sold without any addition of Irish wheat or barley, while the stores are bursting at the seams at the moment with both wheat and barley. The Government have made no attempt whatever to handle this year's crop and I challenge them to deny that. Then they are suggesting that the Opposition are depressing the price of wheat. Who are doing that but the Government themselves who have not done what they should have done for the past two months?

An Leas-Cheann Comhairle

The Deputy is going very wide of the Question.

Mr. Crotty

I am not too far away from it. I feel that this levy of 4/6 a sack on the price of flour will be used to subsidise the export of some of this year's wheat crop in the months to come. That is the reason they are not handling the crop now. Instead of using it, they are importing offals, when Irish wheat could have been used in the supplying of offals. It comes to this, that the Government's justification for the increase was that they were increasing the grist in the mixture of Irish flour from 70 per cent. to 80 per cent. We are not now in that position and I am informed that the mixture will only be 25, or 35 or 40 per cent. of Irish wheat. Do the Government intend to continue this purchase tax on bread which was put on on 5th September? The estimate then was that we would have a reasonable result from this year's harvest. Now the estimate is the other way round and it seems that we shall not have half the amount of Irish wheat to use.

When the Government increased the price first, there was good justification for the expectation that a large proportion of Irish wheat would be used in the grist. Now there is good justification for the price of flour being reduced to at least the figure at which it stood, if not to a lower figure. That, to the ordinary man in the trade, would mean 8/- or 9/- a sack because this increase means an increase in the price of household flour of 8/- or 9/- a sack. I think the Government should reconsider this matter. There is no justification for the increase. I do not want to bring any heat into it but the Government should reconsider it and give the people the benefit they should get from the reduction in the percentage of Irish wheat in the grist.

Minister for Industry and Commerce (Mr. J. Lynch)

Deputy Crotty has developed his argument this evening as if he had never heard my reply to his original question. I have been taken on the Adjournment on a previous occasion and much of what I said then would apply to what I have to say to-night in connection with the price of wheat. On the Deputy's own argument, which started on the premise that the growing of wheat is good national policy, we are agreed. It was accepted by the Government which he supported and in which he held a minor Ministry. Wheat represents a cash crop for the farmers, bringing them several million pounds a year. That addition to their income adds to the spending power of the farmers who, in turn, start economic activity in other spheres.

In all the circumstances, we can accept that the necessity to grow native wheat and to use as much as possible of it in the grist for the production of flour is good national policy and common case. It is accepted that imported wheat is cheaper for a variety of reasons. In the great wheat-producing countries, climatic conditions are better; the vast tracts of land on which wheat is grown make for more economic production in many cases; and there is also the over-production in these countries which they can sell easily. It will be readily understood that wheat can be imported into this country at a much cheaper price than that at which it can be produced by our farmers.

There is, of course, the necessity still, in order to make Irish flour and Irish bread more palatable, to add a proportion of imported wheat to the grist, irrespective of how much Irish wheat is millable. I hope, with Deputy Crotty, the time will come when the necessity for introducing a proportion of foreign wheat into the grist will disappear.

It has been the policy in the past few years—and it is so stated in the Programme for Economic Development—that the mills will take 300,000 tons of native wheat, to be used in the grist. On the present basis of consumption, that would represent 78 per cent. of the grist, the balance being made up of imported wheat. It was not possible in 1958-59 to reach that proportion, by reason of the extremely bad harvest we experienced and through greater introduction of foreign wheat, it was possible to reduce the price of bread somewhat, though not as much as the Government had hoped.

It could have been reduced somewhat more, were it not that the Government thought the farmers were entitled to a little compensation for losses they incurred. The year 1959 was a comparatively dry year and there were 221,204 tons of native wheat used in the grist in 1959/60. That represented 57½ per cent. of the grist. There was, as a result, an increase in the price of bread over the 1958-59 prices. It represented, in fact, a return to the pre-1958-59 price.

This year on the basis of sowings and on the yield expected at the appropriate time, it was agreed the millers would in fact take 300,000 tons of native wheat for milling. On the basis of the consumption of bread and flour during the past year, that would have represented 78 per cent. of native wheat in the grist. As a result of the increase, there would be a correspondingly high cost on the millers in respect of the purchase of Irish wheat and that was represented in the increase of price Deputy Crotty quoted—5s. 9d. for bakers' flour and 7s. 9d. for what he called shop flour.

This year turned out to be an unduly wet year, notwithstanding which more than 300,000 tons of wheat were cut and threshed and presented to the mills. Unfortunately, by reason of the unduly wet year, it was found that much of that wheat was not suitable for milling and the millers and the Government were faced with the prospect of reducing the price to the farmers or creating an arrangement whereby the farmers would not suffer by reason of the bad year. Such an arrangement was come to, and as a result, it has been arranged with the millers that 300,000 tons of such native wheat as is available from the harvest, whether millable or unsuitable for milling, will be purchased by the millers at the guaranteed millable wheat price. Any proportion found to be unsuitable for milling will be exchanged later without price adjustment, for a like quantity of foreign wheat. There is a 4s. 6d. levy, but that is for any surplus over and above the 300,000 tons the millers use.

The £2 tax on imported wheat was abolished more than 12 months ago. In the circumstances of the arrangement I have just outlined, the millers' grist will contain 300,000 tons of wheat for which the guaranteed native prices have been paid by the millers. This represents, in the main, a subvention for the farmers. Were it not for the arrangement, the farmers would get the guaranteed millable price for only whatever proportion of their grain would have been suitable for milling and would, consequently, have suffered a very severe loss.

As Deputy Crotty suggested, I shall not make any political capital out of it. I should say, however, that it is true that if we wanted to have a cheap type of bread, we could get it without using any native wheat. If we wanted to assist the farmers in the circumstances of this year in avoiding what would be catastrophic losses, some arrangement such as has been reached had to be devised.

The Fine Gael Deputies have been bewailing the plight of the farmers here over the past couple of weeks. They objected to this arrangement whereby losses otherwise suffered by the farmers can be obviated at great cost to the Exchequer. They cannot have it both ways—bewailing the plight of the farmers, on the one hand and the arrangement whereby the farmers get the guaranteed price for all their wheat, on the other.

The alternative was subsidisation of bread and flour. As I said here before, subsidies were introduced in 1947 as a temporary measure. They were so accepted in the House at that time. To subsidise flour and bread for the benefit only of the deserving section of the community—the worst off— has been found impossible. In practice, subsidies must be applied generally. Subsidised bread would, therefore, have been available to all sections of the community, including the better off sections. Under the Coalition Government, an effort was made to see if the subsidies could be devised so as to benefit the poorer classes, but two recommendations from the committee set up for that purpose clearly indicated that it was impracticable to do so. Therefore, subsidies as such will not benefit only the poorer sections but also people who can afford to pay higher prices. As well as that, there were complaints from many quarters of subsidised bread being fed to greyhounds.

I am not arguing that as a point against subsidisation. Subsidies would have to be of a general nature and would not, therefore, as I have already pointed out, benefit only the poorer people. It is true, as the Deputy says, that as the standard of living advances in many countries, there is a likelihood of less bread being consumed because people can afford to buy alternative foods.

To sum up, farmers are receiving the guaranteed price for the 300,000 tons or more of native wheat taken in to the mills. The arrangement whereby the mills will receive the quantity of imported wheat which is equal to the proportion of wheat from the farmers found to be unmillable is a great relief to the farmers, and in this year's circumstances, it was something to which the farmers were entitled. We cannot have it both ways. We have to come to the assistance of the farmers in circumstances like these and I do not think the Deputy objects to our doing that.

The Dáil adjourned at 11 p.m. until 10.30 a.m. on Thursday, November 17th, 1960.